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Last Updated: Saturday, 24 November 2007, 14:20 GMT
Fuel bill warnings 'boost prices'
Elderly man by a fire
Heating grants are available for vulnerable households
Warnings that fuel bills could soar are used by companies to "boost" prices, a consumer watchdog has said.

Domestic gas and electricity bills could rise by up to 10% by January, an independent energy broker said earlier.

Catalyst Commercial Services said that if this happened there could be a sharp rise in the number of people struggling to pay for heating.

But Energywatch says it is concerned that energy companies will use such warnings to push up bills.

The rise could push 400,000 more households into "fuel poverty" - when the cost of heating accounts for 10% or more of household income, Catalyst said.

People are more likely to die of the cold in this country than they are in colder countries
John Simpson

An estimated 3.5 million homes in the UK are already defined as being in fuel poverty.

The government admits a big drop a few years ago has been reversed and now more people are falling into this group.

Grants are available to help with fuel bills, it said.

'No excuse'

Allan Asher, chief executive of Energywatch, said: "We know that about this time each year you get these sorts of reports, cold weather coming, shortages coming, and all of that is what happens to boost the prices. There is no excuse for it.

"Energywatch will certainly be campaigning to prevent this. The suppliers have still got all of that money from the price reduction last year that we haven't seen. They're not going to get any more without a fight."

Charities say a rise in the numbers affected by fuel poverty could have tragic consequences. John Simpson, of National Energy Action, says: "We have, in this country, between 25,000 and 45,000 excess winter deaths, which is due to cold homes.

"Colder countries, like Scandinavian countries and Germany, don't have that sort of level, so people are more likely to die of the cold in this country than they are in colder countries."

He told BBC News many vulnerable people did not realise they are entitled to grants to help them insulate their homes and pay for fuel and called on the government to do more to combat fuel poverty.

'Help available'

Energy Minister Malcolm Wicks said: "Obviously the numbers suffering from fuel poverty is sensitive to whether prices go up or down.

"If they go up 1% it could be another 40,000 people classified as fuel poor."

He said the government was determined to work with fuel companies and voluntary organisations to make sure that the most vulnerable households benefited from the help which was available, such as energy efficiency schemes and winter fuel payments.

Energy bills are so erratic anyone could be affected
GA, Kent

Catalyst Commercial Services tracks and analyses energy prices in the UK.

Operations director Chris Hurcombe said domestic energy prices had been falling after steep rises during 2006, with further falls expected.

However, with oil prices at an all-time high and wholesale gas prices also rising again at an "unprecedented rate", domestic bills look set to rise with them.

Cold winter expected

He says gas prices have started going up again because of an increase in worldwide demand, combined with a faster than expected decline North Sea gas supplies, which has meant the UK has had to import more gas from Europe.

Electricity prices are also affected by gas wholesale rates as much of the UK's electricity is produced by gas-fired power stations.
Gas: Up 14% since September
Electricity: Up 18% since September
Coal: Up 100% since June
Source: Energy Retail Association

The Energy Retail Association said the wholesale price of gas and electricity was rising, though suppliers had not yet announced price rises for domestic customers.

The wholesale price of coal has also risen, doubling over the last six months to reach an all-time high of $120 (58.66) per tonne.

Other operating costs for suppliers, including the price of buying carbon in the EU's carbon trading scheme, were also rising, adding to pressure to increase prices for domestic customers.

Chief executive Duncan Sedgewick told BBC News: "Oil is at an all-time high, up towards $100 [48.88] a barrel. And even more worrying, perhaps, coal prices have actually doubled in the course of the last six months.

"So, unfortunately, things aren't looking good but we do have a very competitive market and in the competitive market, the retailers will always be trying to see what they can do."

Mr Hurcombe says a predicted cold winter will compound the problem by causing demand to rise.

The Met Office is forecasting that this winter will be colder than last.

There is a range of schemes run by central and local government to help people on low incomes improve energy efficiency and pay for fuel.

In addition, households with members over 60 are entitled to Winter Fuel Payments worth 200 a year, or 300 for households with members aged 80 or over.

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